A friend of mine once asked, ‘Dear Sir, do you know why Warren Buffett does
not like the stocks of technology? I mean, if he acquired Apple, Google,
Microsoft, etc., he might earned enormous gain in the long term.’ And I
answered, ‘Buffett said that he does not understand technologies. But I think
the actual reason is because he realized that this kind of business has high
risks. For example, between the year 1995 – 1999, there were many technology
companies established in the United States, including internet companies, until
occurred an event that known as dot com bubble. But after the bubble was burst,
almost all of the companies went bankrupt except Google and Yahoo.’

By definition, blue chip stocks are stocks that representing companies with
the following characteristics: 1. The company is large, 2. Have a good
reputation and the name (of the company) is well known to the public, 3. Have a
good financial performance, 4. Usually is the leader of its industry, and 5.
The trading volume (of the stock in the market) is liquid.

First Quarter 2014 was the period in which the financial performance of
most of the second-tier (or also called ‘second liner’) companies has declined,
if viewed from their net profit that fell over the same period in 2013. While
the opposite conditions experienced by large companies (which represented by blue
chip stocks), where their earnings increased. Either this is a cycle or just a
coincidence, but the poor performance of second liner companies has made their shares
dropped in the last two months. One of them is Gema Grahasarana (GEMA), in which
the company posted net profit that fell about 40%, and consequently the shares
continue to fall until Rp380 per share. But with the stock’s PBV that is only
0.8 times, is the price low enough?

If we look at the movement of Jakarta Composite Index (JCI) in the last few
months, where the index rose sharply on March 14, 2014, when Jokowi
officially run for President, and dropped dramatically when Prabowo gain
support from Golkar Party, then it is clear that the majority of stock market
participants (regardless of personal choice of individual investors) prefer
Jokowi as President. However, first you have to realize that the number of
investors in the Indonesian stock market was less than 500 thousand people, aka
very small compared to the total population of Indonesia, which reaches more
than 250 million. So even if all the stock market investors elect Jokowi, then
it's not a guarantee that Jokowi will win the election.

On numerous occasions with Mr. Lo Kheng Hong, he told me that there are at
least two coal stocks that are very attractive for investment because of their low
valuations. They’re Bumi Resources (BUMI), and Resource Alam Indonesia (KKGI).
For BUMI, well, I personally has a slightly different opinion. But for KKGI,
this stock is indeed interesting, and it's not because of the 'romantic story
in the past' in which KKGI had gave us big profit when it surged to Rp8,000’s per
share in early 2012, but due to its low valuation, its bright outlook, and its healthy
balance sheet. Okay, here we go!